The Affordable Care Act (or Obamacare) is officially up and running, with the open enrollment period having begun nationwide on October 1. Due to a variety of glitches in the health exchange’s computer system, many people have been unable to obtain their rates or purchase policies using the online system. Therefore, many people are not yet sure what their rates are even going to be under the new ACA mandates.
However, early data released shows that the insurance premiums for the average American are not going to decrease as pro-ACA groups have been claiming they would. In fact, the opposite is true. Some of the rates that have been compared between pre-Affordable Care Act plans and current plans have increased as much as 300 percent or more, depending on the age of the person applying. This is vastly different than the cheerful predictions made by the Department of Health and Human Services.
Why the Differing Numbers?
While it is certainly true that in some states the insurance premiums are coming in lower than expected, the majority of states have premiums that have more than doubled. The discrepancy between the projected figures has everything to do with which data is being used by which group.
For example, HHS is really only releasing data that is going to lull people into believing that their premiums are going to decrease. Or if they do not decrease, the potential tax credits or subsidies will counteract the increased premiums. In fact, the spin is that even if premiums increase for ACA-compliant plans, the tax credits will not just make up for the difference but actually save you money.
According to an analysis of the premium amounts conducted by the Manhattan Institute, the reality is far different. The Department of Health and Human Services is using data that is skewed towards the states whose premiums are going to decrease, misleading the public into believing that ALL premiums are either going down or will be supplemented by tax credits or subsidies.
What Is Really Going On?
The analysis of the premium increase compared pre-ACA plan prices to post-ACA prices. Even taking into account the facts that there are no longer exclusions for pre-existing conditions and additional coverage is required for preventive health care and maternity coverage, the premium increases were considerably more than reported by HHS.
Granted, all of the data regarding premiums for 2014 has not yet been released. This is no coincidence, as HHS gets to pick and choose which data to include in their report. Using the data available from all of the states where rates have been released, the average premium increase for males was 99 percent, and 55 percent for females.
Clearly, this information conflicts with the data comparison released by HHS. The reason behind this is that HHS only used data that would falsely inflate the positive changes brought about by the Affordable Care Act.
What About Tax Credits or Subsidies?
One of the selling points that HHS has used on the general public is that insurance premiums in many cases will be subsidized, meaning that your premium and out-of-pocket expenses will depend on your yearly income. In addition, if your adjusted gross income (AGI) is less that 400 percent of the federal poverty level, you will qualify for premium subsidies or tax credits.
This is, in fact, true. However, what the Department of Health and Human Services has neglected to mention is that the tax credit or subsidy is quite often not going to be enough to counteract the price of the required coverage.
Since the majority of Americans who are uninsured are people younger than 40 and in basically good health, their premiums will be much higher in order to help subsidize care for the elderly or people with long-term illnesses. Even taking tax credits into account, the cost of health insurance is going to rise significantly for a whole lot of people in that age bracket.
Other Factors to Consider
Another factor that has to be taken into consideration is that the data released by HHS only refers to people who are eligible to participate in the health exchange. For example, as a result of the law, the number of people who will qualify for Medicaid is going to increase significantly in many states. The fact that these are federally funded programs and are therefore subsidized by the taxpayers increases the cost of health care as a whole, regardless of the insured status of individuals.
In addition, those who are covered by an employer-provided health plan are not factored in. As long as spouses are offered coverage on an employer health plan, they are not eligible for a tax credit. And as long as the premiums for the actual employee are not more than 9.5 percent of their AGI, there is no limit on how much it can cost the spouse for coverage.
This means that people in this situation are required to either purchase coverage on the spouse’s policy or pay the penalty for being uninsured. While this may not drive up health care costs nationwide, it certainly does on the individual level.
At this juncture, it certainly appears that the Department of Health and Human Services and the entire Obama administration have been deliberately skewing data in order to try to convince Americans that the ACA is a really great thing for everyone in the country. Since many of us have been wary of the idea of health care reform in the form it has taken thus far, it is not much of a surprise.
At some point, Americans are going to take notice of these discrepancies and inaccuracies and be outraged at how they have been misled. That time is rapidly approaching.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.